Retirement planning is very important. Some of the changes brought by the SECURE Act, such as the changes related to the IRA required minimum distribution (RMD) requirements and the repeal of the maximum age limit for IRA contributions can help you plan better.
No Age Limit for IRA Contributions
Previously, with a traditional IRA the maximum age limit up to which you could contribute was 70.5 years. After this age you could not contribute anymore. Instead you had to take a minimum distribution from your retirement account.
But now, the SECURE Act brought some very favorable change. There is no maximum age limit anymore. You can contribute toward your or your spouse’s Traditional IRA as long as you have sufficient taxable compensation to support your contribution amount and you meet all the other IRA contributions rules.
It is important to note that taxable compensation does not include things such as interest and dividends from investments, pensions, Social Security benefits, unemployment benefits, alimony, and child support. These aren’t considered earned income for IRA contribution purposes.
RMD Required When You Reach 72
In addition, the SECURE Act increased the age limit for the RMD from 70.5 to 72. The RMD generally must begin by April 1 of the calendar year following the calendar year in which you reach age 72. This rule comes into effect for distributions required to be made after December 31, 2019.
These changes are sure to help your retirement fund build bigger and grow longer. You can find more information about the contribution and RMD requirements on the IRS website. If you need help with your tax return preparation or tax planning strategies, gives us a call or schedule an appointment online.
This material is for informational purposes only. It does not constitute tax, legal or accounting advice.